Select Committee on Treasury Minutes of Evidence

Examination of Witnesses (Questions 60 - 79)



  60. That is a very good answer. My last question is this: will not people conclude that actually the purpose of these Departmental Reports is not to reach a very wide audience, but to reach a fairly specialist audience? That audience, as you yourself said at the beginning of this discussion, likes to see a lot of information brought together in one particular volume, rather than having to rush round and find it, so they actually want quite a lot of detail rather than a little, they want some consistency of that detail over time, so the key tables that you can compare various data series with do not suddenly go in and out of the reports, and there were reservations about the FSBR in previous years changing the way in which information was reported. Finally, you want that information reported, audited and monitored in a way in which you have confidence about the integrity of the information and the way it is being presented; you do not want to feel that the department is simply presenting the information about its performance in a way that will paint its performance in the most favourable light each time it comes to report. Are not people going to be concerned genuinely that this move that you are talking about is going to erode all of those things, it is going to give less information, it is going apparently to give departments more flexibility in how they present that information, and it seems to me that it is going to involve very little external audit, even by the Treasury, of the way in which the department reports key elements of its performance, such as the PSAs? If you were therefore somewhat to overpaint your concerns or one's concerns about this particular development, it might be that instead of getting this big document that we looked at earlier on, with a tremendous amount of detail, we are going to end up in a few years' time with a rather "pamphlety" type of document with some rather nice photographs in it, but missing the detailed consistency and integrity that we would actually want out of these documents?

  Chairman: That is a long question. Do you have a short answer?
  (Mr Sharples) I think that detailed consistency and integrity are fundamental to what we are trying to deliver. If there is an issue about how committees receive information, we would be very happy to explore whether we can physically package together the Estimates with a copy of the Departmental Report, to make sure that that comes in one package for you. We are absolutely clear that there must be consistency of reporting. That is why we continue to define the core requirements for departments. I can assure you that the documents will continue to be jointly presented by the Secretary of State concerned and the Chief Secretary. The Treasury is a joint publisher of the Departmental Reports, and we will continue to look very carefully at the content to make sure that clarity, consistency and proper reporting are maintained.

Mr Ruffley

  61. In paragraph 19 of your review you say that there should also remain a duty to perform against targets, but the scope of the guidance should be restricted largely to the technical information, giving departments much greater freedom and responsibility for presenting their activities and outturn according to their audiences. What does that mean?
  (Mr Sharples) Across Government there are a range of departments which vary in size from huge organisations. The Department of Health, for example, has a massive budget but has quite a small centre. It then deals with NHS trusts which provide services. So effective reporting on activity in the Department of Health clearly has to go beyond the work of the Department to encompass the activity of the service as a whole. The Department of Health will have a range of stakeholders who have an interest in what the Department is doing—the medical profession, for example, a range of suppliers—and it would make sense for the Department of Health therefore to design a report which effectively meets the needs of its stakeholders in the light of its structure. Taking another example, the Department for International Development has the largest print run of any department for its Departmental Report, precisely because it has a wide international audience for reporting on its activities, and that audience is interested in particular aspects of what the Department is doing. So I would not want to impose a rigid straitjacket whereby one size fits all, for all departments; I would like each department to be thinking about its audience and structuring its report in the light of its activities and the needs of its eventual readers.

  62. How does what you have just said relate to the PSAs?
  (Mr Sharples) The PSAs are a common thread through all departments. Each department has an aim and objectives and targets set out in the PSA, and that is the bedrock of performance reporting in the Departmental Report.

  63. What you seem to be saying in this paragraph, and what you have just said to us, is that a department will have quite a bit of discretion in how it gets to the outturn for PSAs. That is right, is it not, it follows logically from what you have just said?
  (Mr Sharples) We want departments to think imaginatively about these reports, in order to use the best available communications techniques.

  64. Can we just stick to the PSAs? I am talking about the outturn. Are you allowing individual departments their own discretion in calculating and auditing their outturns against the PSA?
  (Mr Sharples) No, because we require all departments to publish a report on outturn against the PSAs. That report will be checked by the Treasury and others, and it will be published in a consistent way. What I was saying earlier is that we want departments to think about how to communicate those performance reports most effectively. For example, it may be possible to include a small graph which shows the trend on the particular target measure of performance. That may help to understand the relationship between past performance and future targets. It is something which a number of local authorities have done very effectively, for example, in reporting on their performance against comparator local authorities. So we think there are good examples of good practice which we want departments to draw on. We do not want to impose some absolutely rigid "You must set it out in a table in this form"; we want them to find the clearest way of expressing their performance.

  65. So they can be creative in the way they present their performance? It is not rigid, it is not objective, it is as to how they want to present it. It is creative, it is imaginative, to use your earlier word?
  (Mr Sharples) We want to be creative about ensuring clarity of presentation, but we are absolutely firm in insisting on clear and objective reporting of performance against targets.

  66. To be clear, what you are saying to us—and I welcome this—is that you are talking about discretion over presentation, not discretion over the presentation of the outturn which a department will have to do?
  (Mr Sharples) Exactly.

  67. It is then audited by the Treasury or it is validated by the Treasury?
  (Mr Sharples) Yes[2].

  68. But there is a point about presentation, is there not, which is what you have just identified? They will be able to do their own graphs, and they can do all sorts of different axes and make the ascent up the curve look much more impressive than it otherwise might be. Let us leave that, because I think you have explained it very helpfully to me and I now understand that. On the actual objective measuring, the auditing of the outturn against the PSA target, you have talked about "the Treasury and others". That is what your answer was a few seconds ago. Again, that is what you said. You also said to us that you were "exploring external validation". Has not the time come now for the Treasury not only to check what "departmental outturns" are, but for there to be some form of external validation? I wondered whether you could tell us what "exploring" means? What is the timescale for letting this Committee know—we have asked this question before—when ministers will be coming to a conclusion on externally validating the outturns against PSAs?
  (Mr Sharples) The background on external validation is that the Government gave evidence to Lord Sharman's Review of Government Audit and proposed that we should do some work with the National Audit Office and others to see how we can ensure that the information systems which underlie reporting on the PSA targets could be subject to external validation in order to ensure that they are robust and reliable. We have been doing that work with the National Audit Office and will be reporting to ministers shortly.

  69. If external validation comes in, that would obviously appear in the Autumn Report. That is what you would be doing, allowing external validation to be done, and you would anticipate that it would actually form part of the Autumn Report?
  (Mr Sharples) The external validation would.

  70. It would be on the face of the Autumn Report, if we go ahead with it?
  (Mr Sharples) The external validation would apply to the information systems underlying the measurement of performance.

  71. But you are saying it is implicit, not explicit in any Autumn Report?
  (Mr Sharples) We will have to see what ministers decide to do in response to recommendations and advice we may give them. The precise handling and the precise form of any external validation is something that will be made clear once they have taken their decision.

  72. In the interests of transparency, it would be quite nice to have all that set out, would it not, in an Autumn Report? All this is about greater transparency. If—and it is a big "If"—you go to external validation, it would be quite extraordinary for it not to be on the face of any Autumn Report, would it not, Mr Sharples?
  (Mr Sharples) It would clearly make sense, where there has been external validation of information systems, to make that clear. The whole point of any external validation would be to provide an assurance on reliability and robustness of the information, and it would hardly serve that purpose to disguise the fact that that external validation had taken place.

  Chairman: Kali, I believe you want to put a question which is related to your previous question.

Kali Mountford

  73. Yes, I do. I am still concerned about the cost of production, and you were not able to give me a complete answer. I wondered if you could perhaps send us a note at some point covering the points I raised? In particular, I am interested in the cost of production for previous years, which I assume must have been calculated at some point. Also, how many reports are being produced? HMSO must have had orders for them, so we must know how many have been produced and sent out to the public, so surely from that we can make an estimate of how many members of the public do read these reports? What estimate have you made of the cost of production of two reports rather than one for each department, and the effect on costs to the members of the public? I am not satisfied that it would cost them less if they wanted both of them.

  Chairman: You will give us a report on that, is that right, Mr Sharples?
  (Mr Sharples) We shall do our best to provide the information requested. I would just make a couple of points here. One is that there is information, in the reports which we have sent you, on the length of the reports. You can see, for example, that this year reports were nearly 3,700 pages in length.

  74. You will do your best to give us a note on that?
  (Mr Sharples) That is right.

Mr Cousins

  75. I am looking here at the Departmental Report produced in April by the Treasury itself. Looking at the performance in meeting PSA targets, which you rightly say there should be clarity about, I am looking at number 6 which is that the departmental expenditure limits are adhered to, which is a pretty sort of fundamental one from the Treasury's point of view. We are told there that it is on course, then we are given an outturn estimate for the 1999/2000 financial year and a projected figure for the 2001/2002 year, and we are told it is on course. If you actually manage to haul yourself forward to page 30—you have to be pretty sad, in my view, to do that, but all right, I am a sad person—you then discover that the outturn estimate, which seems more or less in line with the plans, has been achieved by taking a £3 billion underspend, chasing it around a bit, spreading it forward into the next two financial years and using £½ billion of it to repay government debt, and then, for the 2000/2001 figure—as to which you are just told what the projected figure is—you are then told that the preliminary judgement was an underspend of £1 billion and this underspend has been carried forward into the 2001/2002 reserve, along with the other underspendings that you would not necessarily have picked up from the figures that you were given on page 6. That is about adhering to expenditure plans. That is something that is absolutely fundamental. That is what people think they have a Treasury for, as well as obviously to save the world, to look after pensioners and all the other things; that is what they think they have a Treasury for. You could describe that, I suppose, as creative, but I do not think you could describe it as clear, could you?
  (Mr Sharples) The position is very clear. I hope it has been clearly set out in successive documents, primarily in the Budget documentation of March of this year, which set out that we expected there to be some underspend on Departmental Expenditure Limits, some of that underspend was being carried forward into this financial year, and against our target of living within Departmental Expenditure Limits, which is the prime control total for public spending, we were on course, because that control limit had not been exceeded. That is our objective, and we met it.

  76. Are these the standards you expect other departments to put forward in their annual reports?
  (Mr Sharples) The Treasury's report, I think, is—

  77.—a model of clarity.
  (Mr Sharples) It is reasonably clear, but, like all departments, I think we can benefit from exploring improvements to the presentation of performance information.

  Mr Cousins: Thank you.

  Chairman: Okay?

  Mr Cousins: I do not know about "Okay".

Dr Palmer

  78. What consultation do you plan with Parliament on the question of electronic publication of the Estimates? This is, as you say, probably a prerequisite for a wider audience who might wish to seek there for a particular purpose, but what will the procedure be? Who will you cut out and what will be your timescale?
  (Mr Sharples) We will be happy to take your advice on the best procedure for consulting Parliament on this point. Our initial inquiries have been with the House authorities as to what their view would be. I should emphasise, though, that this is something on which we will be guided by Parliament. We want the information to be provided in a form that is most useful to you, but we hope that you would take into account the fact that producing a very thick, bound document is quite an expensive operation, and, when that is being done for a very small production run, not a terribly cost-effective way of doing things. If we can design a way of publishing the information electronically, we will be giving it far wider access than it has at the moment, and we may be able to satisfy the practical needs of Parliament by producing a print-off of the electronic version and packaging that in a form that is easy for Parliament to use.

  79. Perhaps I could interact with you on that. I think that in your reports you have identified several potential objectives. One of those is what we call the professionals who tend to want as much information as possible, preferably in one place, but who also want to be able to search through complex documents to find the information they need, so they also have an interest in electronic publication. There is also the audience out there who quite likely just want to find out a single piece of information, they do not want to spend £5,000, they do not want fat books, they want to look up something and they are heavily into electronic information. Then there is the third group who are the people who write the reports. In some of the papers they opposed the idea of having written summaries; basically they said, "This would mean more work for us", and that it would be quite difficult to decide what goes into the summary and what is left out, it is just an extra layer of complexity. I am very anxious that with the advance of the Internet availability, both for professionals through support-source searching and for the wider public in a realistic way—the stakeholders around the country, as it were—that should not be held up by objections in principle. I would urge that the departments do not have a hard-and-fast rule that everything absolutely has to be in some printed, bound document, so long as it is available for Members of Parliament, for instance in a print-off. I can well imagine that there would be complex data which would actually be quite happy to be on the Internet main source. Would you agree that that would be the general thrust?
  (Mr Sharples) We would agree, and we would very much welcome further discussion about how we can take advantage of the enormous potential of Internet publishing for producing documents which are easier to use in practice than a big, bound paper document. There is great potential there for, for example, making electronic links with other documents, that could be of advantage to Parliament, and we would be very pleased to explore that.

2   Note by Witness: In the sense that it is reviewed and checked by the Treasury. Back

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